About this calculator
Prepaying early in the loan saves the most interest because the outstanding balance is highest. On a fixed-rate loan, check the charge first; floating-rate loans to individuals have none.
Car Loan Prepayment Calculator
Worked example
| Scenario | Result |
|---|---|
| Original loan | ₹8,00,000 at 9%, 60 months, EMI ₹16,607 |
| Interest without prepayment | ₹1,96,401 |
| Prepay ₹1,00,000 after 12th EMI (keep EMI same) | Loan ends in 52 months |
| Interest with prepayment | ₹1,57,192 |
| Interest saved | ₹39,209 |
Before prepaying a fixed-rate loan, subtract the charge: e.g. 3% + GST on ₹1 lakh = ₹3,540. On floating-rate loans to individuals there is no charge.
Prepayment rules
| Situation | Rule |
|---|---|
| Floating-rate loans to individuals (non-business) | No prepayment / foreclosure charge — any lender, part or full, from any source of funds |
| Loans sanctioned or renewed from 1 Jan 2026 | RBI (Pre-payment Charges on Loans) Directions, 2025 also bar charges on floating-rate business loans to individuals and MSEs at most banks and large NBFCs; no minimum lock-in |
| Fixed-rate loans | Lender may charge as per the sanction letter and Key Facts Statement |
| Disclosure | Any charge must be shown in the sanction letter, loan agreement and KFS; waived charges cannot be levied later |
Charges by bank
| Lender | Processing fee | Prepayment / foreclosure |
|---|---|---|
| Canara Bank Car Loan | 0.25% of loan (min ₹1,000, max ₹5,000) + GST; 50% waiver from 1 Jul to 30 Sep 2026 | No prepayment penalty |
| Bank of Baroda Car Loan | Up to ₹10 lakh: ₹1,500 + GST; above ₹10 lakh: ₹2,000 + GST; ₹500 + GST for government / PSU employees | Floating: nil. Fixed: free up to ₹40,000 within 2 years, 2% + GST above that within 2 years, nil after 2 years |
| PNB Car Loan | 0.25% of loan (min ₹1,000, max ₹1,500) + GST | Floating: nil. Fixed: 2% of amount prepaid (exceptions when prepaid from own funds) |
| Union Bank of India Car Loan | ₹1,000 + GST (aggregator); often waived for electric vehicles | Nil (floating rate); the bank also states nil when closed from own verifiable sources |
| HDFC Bank Car Loan | Up to 0.5% of loan (min ₹3,500, max ₹8,000) per BankBazaar; ClearTax shows 1% (min ₹3,500, max ₹9,000) — plus GST | Foreclosure 6% of principal outstanding within 12 months, 5% at 13 – 24 months, 3% after 24 months |
| ICICI Bank Car Loan | Up to ₹8,500 + GST | Foreclosure 3% + GST up to 12 months, 2% + GST at 13 – 24 months, nil after 24 months; part-prepayment 3% + GST up to 24 months, nil after |
| SBI Car Loan | Up to ₹5 lakh: ₹500 (salaried) / ₹750 (others); ₹5 – 10 lakh: ₹1,000 / ₹1,250; above ₹10 lakh: ₹1,500 / ₹2,000 — all + GST | No prepayment charge; foreclosure charge waived after 2 years |
| Axis Bank Car Loan | ₹3,500 – ₹5,500 + GST | Foreclosure charge 5% of principal outstanding |
Frequently asked questions
Should I reduce tenure or EMI after prepaying?
Reducing tenure saves more interest; reducing EMI helps cash flow. Many banks default to reducing tenure.
When is prepayment free at private banks?
ICICI Bank charges nothing after 24 months; Bank of Baroda fixed loans are free after 2 years (and up to ₹40,000 before that). Check your KFS.
For information and comparison only. Loan terms, rates and rules change — confirm with the lender and read the Key Facts Statement before borrowing.